The government of India and Reserve Bank of India(RBI) is least concerned about the consequences of continuous fall of rupee.The rupee has been depreciating for quite some time and fell to a historic low of Rs 52.73 per dollar in early trade on Tuesday. The fall of share market continuously putting pressure on the demands of the dollar. On the other hand, the Eurozone crisis has lowered export demands from India. The multitude effects have badly eroded value of the rupee in the international market.
This may help those companies who have been exporting the goods regularly but will make import costlier effecting even regular used items too. But IT and others export oriented units are getting less export order due to Eurozone and USA debts crisis.The depreciation of rupee will adversely effect the balance sheet of those company who have raised the ECB loan at lower rates of Interest but now they will have to pay 16% more for the same installment.
Indian has been importing low cost items like toys, artificial jewelry, pulses, edible oil, artificial leathers, instruments etc from China and Korea which can badly disturb the budget of poor and middle class citizens. Whom they(Poor) should curse despite the fact our Prime Minister Manmohan Singh is leading economist of the world but has totally failed in controlling prices of goods and modesty of rupee vis-a-vis others leading currencies.
The RBI is counting cause of fall of rupee due to low inflow of dollar from abroad which is putting pressure on rupee which is not chewable because fall of rupee encourage our Non residents to send more and more dollar to India due to greed to get more rupees.
Depreciation of rupee can increase cost of petrol and diesel also-which can raise cost of input of manufacturing unit and farmers cost too. On the other hand, the fall of rupee can increase money supply because more money will come in the monetary system, consequently, this will increase further double digit inflation.
We do not agree with the statement of Reserve Bank Deputy Governor Subir Gokarn who said,"We don't have any target or a rate in mind. It's moving as per market dynamics. Depreciation of the rupee is disruptive, there is no question. There will be impact on our import bill, particularly for Oil and energy. It's having an impact on companies and it is a problem, and any action to arrest the fall will be guided by medium-term considerations".
Mr. Subir Gokarn should not forget that 80 crore citizens are already under or near poverty line, and any increase in prices can further pain the poor. Though, the exchange rate of rupee with major currencies is market-determined so far, but how long RBI will remain silent and allow economy at the mercy of God.
The parity of rupee has to be fixed to suit the import and export imbalances so that further fall of rupee could not push our India into recessionary trend as already major European Zone and USA are reeling under recession.
Indian Rupee to US Dollar Exchange Rate
Indian has been importing low cost items like toys, artificial jewelry, pulses, edible oil, artificial leathers, instruments etc from China and Korea which can badly disturb the budget of poor and middle class citizens. Whom they(Poor) should curse despite the fact our Prime Minister Manmohan Singh is leading economist of the world but has totally failed in controlling prices of goods and modesty of rupee vis-a-vis others leading currencies.
The RBI is counting cause of fall of rupee due to low inflow of dollar from abroad which is putting pressure on rupee which is not chewable because fall of rupee encourage our Non residents to send more and more dollar to India due to greed to get more rupees.
Depreciation of rupee can increase cost of petrol and diesel also-which can raise cost of input of manufacturing unit and farmers cost too. On the other hand, the fall of rupee can increase money supply because more money will come in the monetary system, consequently, this will increase further double digit inflation.
We do not agree with the statement of Reserve Bank Deputy Governor Subir Gokarn who said,"We don't have any target or a rate in mind. It's moving as per market dynamics. Depreciation of the rupee is disruptive, there is no question. There will be impact on our import bill, particularly for Oil and energy. It's having an impact on companies and it is a problem, and any action to arrest the fall will be guided by medium-term considerations".
Mr. Subir Gokarn should not forget that 80 crore citizens are already under or near poverty line, and any increase in prices can further pain the poor. Though, the exchange rate of rupee with major currencies is market-determined so far, but how long RBI will remain silent and allow economy at the mercy of God.
The parity of rupee has to be fixed to suit the import and export imbalances so that further fall of rupee could not push our India into recessionary trend as already major European Zone and USA are reeling under recession.
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